February 6, 2013

KEYW Reports Q4 and 2012 Financial Results

HANOVER, Md., Feb. 6, 2013 (GLOBE NEWSWIRE) -- The KEYW Holding Corporation (Nasdaq:KEYW) announces revenue for full year 2012 of $243.5 million, as compared to $190.6 million in 2011, an increase of 28%. Net income for 2012 was $1.0 million and included Research and Development expenses of $5.4 million. KEYW increased Research and Development spending by 130% in 2012 versus 2011. Fully-diluted GAAP earnings per share (EPS) was $0.03. Acquisition-related amortization and other one-time expenses reduced 2012 fully-diluted GAAP EPS by $0.42. Adjusted EBITDA (as described below) for 2012 was $33.0 million, or 13.5% of 2012 revenue.

For the fourth quarter of 2012, revenue was $74.2 million and net income was $0.2 million. Fourth quarter 2012 adjusted EBITDA was $10.4 million, or 14% of revenue. During the fourth quarter, KEYW received $125 million in funded contract actions and ended the year with 1,104 employees.

"I am very pleased with KEYW's performance in 2012. Not only did we continue to significantly grow the work we do for our Intelligence Community customers, but we made substantial progress in moving down one of our 'horizontal path' efforts, Project G," commented Leonard Moodispaw, CEO and President of KEYW Corporation. "In addition to engaging our three early adopters, we have also begun the transition to the commercial phase of Project G.  And the pipeline of potential customers is still building. I continue to expect 2013 to be a transformational year for KEYW and I am enthusiastic about the opportunities we see in all three of our core focus areas: counter-terrorism, cyber, and geospatial."

As noted, revenue for the fourth quarter of 2012 was $74.2 million, an increase of 48% versus revenue of $50.1 million in the fourth quarter of 2011. The increase was driven by organic growth and the acquisitions of Poole & Associates and Sensage. Net income was $0.2 million in the fourth quarter of 2012 versus $0.3 million in the fourth quarter of 2011. Fourth quarter 2012 fully-diluted GAAP EPS was less than one cent per share. Amortization of acquisition-related intangibles and other one-time expenses reduced fourth quarter fully-diluted GAAP EPS by approximately $0.11.

Adjusted EBITDA, as defined by KEYW, is a non-GAAP measure that is calculated as GAAP net income plus other non-recurring expense, interest expense, income taxes, stock compensation, depreciation, and amortization. We have provided Adjusted EBITDA because we use the measurement internally to evaluate performance and we believe it is a commonly used measure of financial performance in comparable companies. It is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. In addition, our board of directors and management use Adjusted EBITDA:

  • As a measure of operating performance;
  • To determine a significant portion of management's incentive compensation;
  • For planning purposes, including the preparation of our annual operating budget; and
  • To evaluate the effectiveness of our business strategies.

Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table below that reconciles GAAP net income to Adjusted EBITDA.

 Year ended
December 31, 2012
Year ended
December 31, 2011
Three months ended
December 31, 2012
Three months ended
December 31, 2011
  (Unaudited and in thousands)
         
Net Income $1,015 $535 $180 $318
         
Depreciation  4,369  2,082  1,229  944
         
Intangible Amortization  21,411  13,410  6,804  5,304
         
Public Offering and Acquisition Costs  938  588  552  139
         
Stock Compensation Amortization   3,024  2,829  956  660
         
Interest Expense  2,307  907  1,017  364
         
Tax (Benefit) Expense  (86)  218  (338)  233
         
Adjusted EBITDA $32,978 $20,569 $10,400 $7,962
 
 
THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
         
 Three months ended
December 31, 2012
Three months ended
December 31, 2011
Year ended
December 31, 2012
Year ended
December 31, 2011
  (Unaudited)    
Revenues        
Services $53,180 $37,770 $171,776 $159,748
Integrated Solutions 21,057 12,300 71,744 30,839
Total 74,237 50,070 243,520 190,587
         
Costs of Revenues        
Services 39,739 27,526 125,362 115,343
Integrated Solutions 8,053 6,334 34,365 18,607
Total 47,792 33,860 159,727 133,950
         
Gross Profit        
Services 13,441 10,244 46,414 44,405
Integrated Solutions 13,004 5,966 37,379 12,232
Total 26,445 16,210 83,793 56,637
         
Operating Expenses        
Operating expenses 18,775 9,837 59,189 41,399
Intangible amortization expense 6,804 5,304 21,411 13,410
Total 25,579 15,141 80,600 54,809
         
Operating Income 866 1,069 3,193 1,828
         
Non-Operating Expense, net 1,024 517 2,264 1,075
         
(Loss) Income before Income Taxes  (158)  552  929  753
         
Income Tax (Benefit) Expense, net  (338)  234  (86)  218
         
Net Income $180 $318 $1,015 $535
         
Weighted Average Common Shares Outstanding        
Basic 35,725,283 26,139,832 28,239,945 25,991,914
Diluted 38,836,329 28,001,472 31,152,924 28,903,869
         
Earnings per Share        
Basic $0.01 $0.01 $0.04 $0.02
Diluted $0.00 $0.01 $0.03 $0.02
 
 
THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
     
 December 31,
2012
December 31,
2011
ASSETS    
Current assets:    
Cash and cash equivalents $5,639 $1,294
Receivables 58,482 40,630
Inventories, net 8,739 7,242
Prepaid expenses 1,880 2,511
Income tax receivable 96 27
Deferred tax asset, current 3,149 1,193
Total current assets 77,985 52,897
     
Property and equipment, net 23,860 8,707
Goodwill 290,861 164,466
Other intangibles, net 53,799 39,002
Deferred tax assets 13,608 2,348
Other assets 2,562 211
TOTAL ASSETS$462,675 $267,631
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $7,254 $4,136
Accrued expenses 8,393 4,370
Accrued salaries & wages 17,770 9,644
Revolver 21,000 49,500
Term note — current portion 5,688 -- 
Deferred income taxes 1,429 1,591
Total current liabilities 61,534 69,241
Long-term liabilities:    
Term note — non-current portion 63,000 --
Non-current deferred tax liabilities 29,700 17,430
Other non-current liabilities 7,413 301
TOTAL LIABILITIES 161,647 86,972
     
Commitments and contingencies -- --
     
Stockholders' equity:    
Preferred stock, $0.001 par value; 5 million shares authorized, none issued --  -- 
Common stock, $0.001 par value; 100 million shares authorized, 36,135,542 and 25,554,533 shares issued and outstanding  36 26 
Additional paid-in capital 292,715 173,371
Retained earnings 8,277 7,262
Total stockholders' equity 301,028 180,659
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$462,675 $267,631
 
 
THE KEYW HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
     
 Year ended
December 31, 2012
Year ended
December 31, 2011
     
Net income $1,015 $535
Adjustments to reconcile net income to net cash provided by operating activities:    
Stock compensation  3,024  2,829
Depreciation/Amortization  25,780  15,492
Loss on disposal of equipment  87  -- 
Windfall tax benefit from option exercise  (140)  (144)
Deferred taxes  (1,864)  (2,036)
Decrease (increase) in balance sheet items:    
Receivables  (8,546)  (1,784)
Inventory  (1,313)  (1,903)
Prepaid expenses  910  1,288
Income tax receivable  (69)  251
Accounts payable  (298)  (2,694)
Accrued expenses  (2,429)  (1,554)
Other balance sheet changes  (2,128)  23
Net cash provided by operating activities 14,029  10,303
     
     
Cash flows from investing activities:    
Acquisitions, net of cash acquired  (131,392)  (58,573)
Purchase of property and equipment  (10,721)  (3,508)
Proceeds from sale of equipment  --   -- 
Net cash used in investing activities (142,113) (62,081)
     
Cash flows from financing activities:    
Proceeds from stock issuances  94,451  -- 
Proceeds from term note  70,000  -- 
Proceeds from revolver  51,500  79,500
Repayment of debt  (81,312)  (30,000)
Repurchase of stock  (2,948)  (3,079)
Windfall tax benefit from option exercise  140  144
Proceeds from option and warrant exercises  598  712
Net cash provided by financing activities 132,429  47,277
     
Net increase (decrease) in cash and cash equivalents  4,345  (4,501)
Cash and cash equivalents at beginning of period  1,294  5,795
Cash and cash equivalents at end of period$5,639 $1,294

A conference call has been scheduled to discuss these results on February 6th at 5:00 p.m. (EST). At that time, Management will review the Company's fourth quarter and full year 2012 financial results, followed by a question-and-answer session to further discuss the results.

Interested parties will be able to connect to our Webcast via the Investor page on our website, http://investors.keywcorp.com on February 6, 2013. We encourage people to register for an email reminder about the Webcast on the Event Calendar tab, also found on the Investors page of our website. Interested parties may also listen to the conference call by calling 1-877-853-5645. The International Dial-In access number will be 1-408-940-3868.

An archive of the Webcast will be available on our webpage following the call. In addition, a podcast of our conference call will be available for download from our Investors page of our website at approximately the same time as the webcast replay.

About KEYW

KEYW provides agile cyber superiority, cybersecurity, and geospatial intelligence solutions for U.S. Government intelligence and defense customers and commercial enterprises. We create our solutions by combining our services and expertise with hardware, software, and proprietary technology to meet our customers' requirements. For more information contact KEYW Corporation, 7740 Milestone Parkway, Suite 400, Hanover, Maryland 21076; Phone 443-733-1600; Fax 443-733-1601; E-mail investors@keywcorp.com; or on the Web at www.keywcorp.com.

Forward-Looking Statements: Statements made in this press release that are not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include but are not limited to statements about our future expectations, plans and prospects, and other statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," "potential," "opportunities", and similar expressions. Our actual results, performance or achievements or industry results may differ materially from those expressed or implied in these forward-looking statements. These statements involve numerous risks and uncertainties, including but not limited to the opportunities and our expectations related to the commercial phase of our Project G efforts and the opportunities in our three core business areas, as well as those risk factors set forth in our Annual Report on Form 10-K, dated and filed March 15, 2012 with the Securities and Exchange Commission (SEC) as required under the Securities Act of 1934, and other filings that we make with the SEC from time to time. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements. KEYW is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

CONTACT: Chris Donaghey

         443-733-1600


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